October 13th 2026, 1:31 AM
Treasury Yields Surpass S&P 500 as Yield Gap Hits Record Low
Key Summary
The S&P 500's yield spread over 10-year Treasuries has hit -1.5 percentage points, the lowest since 2009, as safer government bonds now out-yield stocks. This marks the longest streak of negative annual readings since 2002, with investors expecting stocks to out-yield bonds due to risk. However, the spread's decline may not necessarily predict stock market downturns, as forward earnings paint a calmer picture.
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Background Context
FTX's crypto mining venture has been acquired by SWI Group, which plans to use it to advance AI and data center expansion in Europe and the US.Historical Analysis
Since 2022, the spread has fallen 440 basis points, its largest 5-year decline since the 1970s.Market Implications
A negative yield spread implies an earnings yield near 3.9%, or roughly 26 times trailing earnings.Expert Insights
Nir Kaissar, Bloomberg columnist, found that the premium barely predicted returns over one to five years, but the link to 10-year returns was stronger.Market Outlook
The Kobeissi Letter expects an eventful fourth quarter, though the spread alone cannot time a turning point.Conclusion
The record low yield gap suggests a shift in investor sentiment, with safer government bonds now out-yielding stocks.#TreasuryYields#S#YieldSpread#BondMarket#Crypto